Over the past two months, public interest rates on Bitcoin options have remained fairly stable, even though the figure rose 118% to $ 8.4 billion as the (BTC) price rose to a new all-time record. The result of Bitcoin’s price appreciation and rising public interest rates on BTC options led to a historic expiration of $ 3.8 billion set on January 29.
To understand the potential impact of such a large expiration, investors need to compare it with the volumes seen on the stock market. Although some data collectors display more than $ 50 billion to $ 100 billion in Bitcoin volume daily, a 2019 report, written by Bitwise Asset Management, found that many exchanges use a variety of questionable techniques to trade volumes. bladder.
Therefore, it is better to analyze the figure of trusted data collectors instead of relying on the data offered by the largest exchanges.
As the above data indicates, BTC’s spot volume on the stock market averaged $ 12 billion over the past 30 days, an increase of 215% from the previous month. This translates to the upcoming expiration of $ 3.8 billion to 35% of the daily average BTC average volume.
45% of all Bitcoin options expire on January 29
Exchanges offer monthly expiration, although some also include weekly options for short-term contracts. On December 25, 2020, the largest expiration was recorded, as option contracts of $ 2.4 billion expired. This figure represents 31% of all open interest and shows how options are usually distributed throughout the year.
Data from Genesis Volatility shows that Deribit’s expiration calendar for January 29 contains 94,060 BTC. This unusual concentration amounts to 45% of the contracts that will expire within twelve days. A similar effect has on the remaining exchanges, although Deribit has an 85% share overall.
It is noteworthy that not every option will trade at expiration, as some of the strikes now sound unreasonable, especially if there are less than two weeks left.
The bullish $ 46,000 call options and above are now considered worthless and the same happened with the clumsy put options below $ 28,000 as 68% of them are now effectively worthless. This means that only 39% of the $ 3.8 billion that will expire on January 29 is worth exploring.
The analysis of public interest provides data of transactions that have already passed, while the skewed indicator monitors real-time options. This measure is even more relevant since BTC traded below $ 25,000 just thirty days ago. Therefore, the open interest near that level does not indicate clumsiness.
Market makers are not willing to take upward risk
When analyzing options, the delta skew of 30% to 20% is the most important measure. This indicator compares call (buy) and put options side by side.
A 10% Delta skew indicates that call options are trading at a premium on the more bearish / neutral put options. On the other hand, a negative bias means a higher cost of downward protection and is a sign that traders are clumsy.
According to the above data, the last time a bearish sentiment emerged on January 10 was when the Bitcoin price plunged by 15%. This was followed by a period of extreme optimism, as the delta skew of 30% -20% 30 passed.
When this indicator exceeds 20, it reflects the fear of potential price increases by marketers and professionals, and is therefore considered a positive disposal.
While a $ 3.8 billion decline is tingling on the backbone, nearly 60% of the options are already considered worthless. As for the remaining public interest, bulls are mainly in control as the recent price increase to a new everyday high has wiped out most clumsy options. With the expiration of the expiration, a growing number of put options will lose their value if BTC stays above the range of $ 30,000 to $ 32,000.
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